Sales Tax Payment from eBay to CDTFA - California

[llnegn]

Hello,

I am trying to file my annual Sales and Use tax form that is due no later than January 31st. I know how much I have collected from my buyers up until the end of September. I can also figure out how much eBay has collected from October to the end of the year. I called the CDTFA and they said that I should not file my report until eBay has sent in their share so that total amount of tax will match the amount of tax owed based on the total CA sales that I report on the tax form. I called eBay and they said it would be paid before the end of the month. 

Does anyone else have any experience or knowledge of when eBay may be paying their share of the collected tax?

Thank you.

[slippinjimmy]

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@llnegn wrote:

Hello,

I am trying to file my annual Sales and Use tax form that is due no later than January 31st. I know how much I have collected from my buyers up until the end of September. I can also figure out how much eBay has collected from October to the end of the year. I called the CDTFA and they said that I should not file my report until eBay has sent in their share so that total amount of tax will match the amount of tax owed based on the total CA sales that I report on the tax form. I called eBay and they said it would be paid before the end of the month. 

Does anyone else have any experience or knowledge of when eBay may be paying their share of the collected tax?

Thank you.

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That doesn't sound at all correct. Mainly because when eBay reports and remits I doubt very much that they will be providing any details that can be tied to a specific seller.

I have no idea when eBay will remit, likely they are on monthly reporting but I still doubt that it matter one bit and I recommend you file as you normally would, by the usual required date.

[dhbookds]

Since this is the first year any of this has taken place, no one is going to have much experience.

I with Jimmy.....do what you normally do.........Cal will be able to match IF they had planned to......

[mam98031]

Yes, I'm with the others, that absolutely doesn't sound right.  Ebay is legally responsible for collecting the tax in your state as of October 1st, not you.  Your report should not be dependent on another company filing their report.  That just doesn't sound right.

You may want to try a different approach.  Find out what your reporting requirements are.

For example, I'm in Washington.  I have to claim all my retail sales [taxable] as normal on my return to the state.  But I take a deduction from taxes paid via an MFL [Marketplace Facilitator Law] to arrive at a net amount if any that would be due to the state.

I sell on more than one site as many sellers do.  So all of that has to be taken into consideration when filing our reports.  But check to see what the reporting requirements are.  Keep in mind that you are NOT responsible for when Ebay files their reports or pays what they owe in taxes, nor can your state hold you responsible for that.  That is the purpose of the MFLs.

[llnegn]

Hello,
Thank you for the replies. I will try to explain a little better.
I use tax jar to get all my numbers - works great.
I know my CA sales from January to October. I know how much I have collected in tax.
I also know how many sales I had from October to the end of the year. I also know how much tax eBay has collected on my behalf.
Now, on the yearly sales and use tax report that you need to file by January 31st, it asks you to state TOTAL Sales for the year. It also has you state TOTAL sales tax was withheld. I have all these numbers. What is not going to match up is the eBay withheld amount of money.
Example - (made up numbers)
Sales from January to end of September - $20000
Sales from October to end of year - $5000
Tax collected for January to September by me - $200
Tax collected for October to end of year by eBay - $50

When I file my report I also have to pay the tax that was collected - in this case I actually owe - $250
$200 from me and $50 from eBay.
The person at the CDTFA said that if I submit before eBay pays their share, I will be $50 short.

[twnpopcards]

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@llnegn wrote:
Hello,
Thank you for the replies. I will try to explain a little better.
I use tax jar to get all my numbers - works great.
I know my CA sales from January to October. I know how much I have collected in tax.
I also know how many sales I had from October to the end of the year. I also know how much tax eBay has collected on my behalf.
Now, on the yearly sales and use tax report that you need to file by January 31st, it asks you to state TOTAL Sales for the year. It also has you state TOTAL sales tax was withheld. I have all these numbers. What is not going to match up is the eBay withheld amount of money.
Example - (made up numbers)
Sales from January to end of September - $20000
Sales from October to end of year - $5000
Tax collected for January to September by me - $200
Tax collected for October to end of year by eBay - $50

When I file my report I also have to pay the tax that was collected - in this case I actually owe - $250
$200 from me and $50 from eBay.
The person at the CDTFA said that if I submit before eBay pays their share, I will be $50 short.

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I also live in CA and have a resale license.  At this point in time, unless CA has added a line for facilitator sales (I file annually also but in July, all you can do is combine all of the taxable sales that Ebay collected the tax for under items sold for resale.  That allows you to report all of your sales so if Sales Tax agency compares your total income to your  CA Income tax return the numbers for gross sales will still match and be correct. The Feds also compare many times so you will have reported everything the same to all agencies.  For lack of a better way to explain it, with the new facilitator laws regarding Sales Tax you are in effect selling the item to Ebay who is reporting the end taxable sale to each state. 

This method is even further substantiated as Ebay has made an arrangement with the city of San Jose that all CA sales are made by Ebay in San Jose so that San Jose receives the 1% local tax on all taxable sales made  to CA buyers even though they actually have no inventory.  After San Jose has collected $5 million in a calendar year, Ebay will be allowed to keep 30% of the remaining 1% for that year.  Ebay is estimating this arrangement will put an additional $10 million per year into their coffers and out of the other local districts where the buyers live.  Evidently at this point in time, our politicians have not taken any steps to correct the laws to prevent this type of arrangement from being made, so Ebay is now effectively who you have sold your item to, at least for Sales Tax purposes.  When I spoke to CDTFA late last year they conceded that at that time the only way to report these sales is as items sold for resale by the customer.  Hopefully they will add a Facilitator Sales line for these types of sales in the near future.

[luckythewinner]

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@llnegn wrote:
in this case I actually owe - $250 
$200 from me and $50 from eBay.

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$250 is owed, but you do not owe $250. You only owe $200 of it. 

"The CDTFA will not hold a marketplace seller liable for tax on a transaction facilitated through a marketplace if the CDTFA can verify that the marketplace facilitator in fact collected the correct amount of tax or tax reimbursement from the purchaser on that transaction and paid it to the CDTFA."

https://www.cdtfa.ca.gov/industry/MPFAct.htm

[bbox420]

This is super confusing...I am also based out in San Jose, CA. 

I started selling in 2019 and did not obtain a permit or EIN. Will I still need to obtain these items for filing taxes??

Or do I simply use what eBay will submit to me for 2019 taxes?

[mam98031]

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@bbox420 wrote:

This is super confusing...I am also based out in San Jose, CA. 

I started selling in 2019 and did not obtain a permit or EIN. Will I still need to obtain these items for filing taxes??

Or do I simply use what eBay will submit to me for 2019 taxes?

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@bbox420 

You should be set up with your state as a small business.  That typically doesn't cost anything to do so and you will likely not cross the thresholds to pay any business taxes, but you should be reporting to your state and you income should be stated every year on your income reported to the IRS.

You should always keep records for your business, without exception.  Any reports on Ebay or PP are supporting documents and should not be your main business records.  Besides, Ebay doesn't have a yearly report you can even get.  

As to sales tax, if you sold to someone inside your state BEFORE the MFLs started and Ebay had to start collecting the taxes for you, you should have been collecting sales tax and remitting them to your state on your reports.  Likely a yearly report due to your size.  But check with your state for specifics.

[tealt]

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@bbox420 wrote:

This is super confusing...I am also based out in San Jose, CA. 

I started selling in 2019 and did not obtain a permit or EIN. Will I still need to obtain these items for filing taxes??

Or do I simply use what eBay will submit to me for 2019 taxes?

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California's Marketplace Facilitator law did not go into effect until October 1, 2019.

If you sold any items before October 1 that were delivered to a California address, your buyer(s) should have been paying sales tax.  If the buyer(s) didn't pay sales tax, you must pay it.  The CDTFA web site is the place to get information about this and to apply for a sales tax collection permit (aka resale number).

If this your first experience as a small business, you also need to check with the City of San Jose to see if you need a city business license.  I am next door in Sunnyvale and am required to have a city business license for Sunnyvale.

[corvettestainless]

Sales; for sales tax purposes, made after October are now 'not taxable sales' and you simply do not report those, or you report them as 'foreign sales' just like you do for sales made in the other 49 states. Until Cali revises the form, this is the most accurate way to do it. Technically, sales made in Cali after October (for sales tax purposes only) were made by Ebay- therefore, you do not report them in your 'gross taxable for Cali sales'.

2018 would look like

100k gross

95k foreign sales (out of state)

5k gross income that was taxed and collected by me.

2019 would look like

100k gross

97k foreign sales (which would now include all 49 state + international sales made, plus 3 mos' worth of 'Cali' sales which that sales was collected by others)

3k gross income that was taxes and collected by me. This is what Cali gets for sales tax from you - 8% (example) of $3k